Balancer Unveils V2 of Balancer Protocol

Balancer Unveils V2 of Balancer Protocol

By Abhimanyu Krishnan | News | 3 Feb 2021


In a blog post published on Feb. 2, Balancer (BAL) revealed the details of the upgrades that will arrive with Balancer v2.

  • The four factors driving the v2 upgrade are security, flexibility, capital efficiency and gas efficiency, with the overall goal focused on making Balancer (BAL) the market’s primary liquidity source
  • Specific upgrades and improvements include a “Protocol Vault”, lower gas costs, customizable AMM logic, asset managers for better capital efficiency, and community governed protocol fees
  • The Protocol Vault brings the most change to Balancer’s design and is a single vault that handles all of the assets in all Balancer’s pools
  • One of the design principles of the upgrade is the focus on separating the AMM aspect of Balancer from token management and accounting
  • This allows each pool to handle AMM logic independently, as well as implement customizable logic; the Protocol Vault handles token management and accounting properties 
  • Examples of customizable AMM logic applications include weighted pools (like index funds), stable pools and smart pools
  • Gas costs are also only considered on the final net token amounts transferred from vaults, which is also stated as being useful for high-frequency trader efficiency; the project is also testing a pilot for gas reimbursement 
  • Asset managers are external smart contracts that have control over the tokens deposited in the vault, which then be sent to lending protocols to boost yield
  • The upgrade is currently being audited and is expected to see a release in March

Abhimanyu Krishnan
Abhimanyu Krishnan

Technophile, cryptocurrency enthusiast and journalist.


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